What is Facebook’s Libra Cryptocurrency ?

Libra is a permissioned blockchain digital currency proposed by the American social media conglomerate Facebook. The project, currency and transactions are to be managed and entrusted to the Libra Association, a membership organization founded by Facebook’s subsidiary Calibra and 27 others across payment, technology, telecommunication, online marketplace, venture capital and nonprofits.

As of June 2019, the currency and network do not yet exist, and only rudimentary experimental code has been released.The launch is planned to be in 2020.

The plan is for the Libra token to be backed by financial assets such as a basket of currencies,and US Treasury securities in an attempt to avoid volatility.Facebook has announced that each of the partners will inject an initial US$10 million, so Libra has full asset backing on the day it opens.

Libra service partners, within the Libra Association, will create new Libra currency units based on demand.Libra currency units will be retired as they are redeemed for conventional currency.

Initial reconciliation of transactions will be performed at each service partner, and the blockchain’s distributed ledger will be used for reconciliation between service partners.The intent is to help prevent everyone but members of the Libra Association from trying to extract and analyse data from the distributed ledger.

In contrast to cryptocurrencies such as bitcoin which use permissionless blockchains, Libra is not decentralized, relying on trust in the Libra Association as “a de facto central bank”.